---
title: 'Bitter Words'
category: investing
tags:
  - thoughts
published: true
date: 2025-08-12 11:58:25
description: 'The index rises, institutions chase alpha, individuals ride beta. Arrogance and bigger bets drag them to zero, so stop fighting the market and trust time.'
---

![](371b52-1737205768.png)

First, look at the graph above

**Blue is the index return**

Assets = inflation = up and to the right
Capital X time X average value = up and to the right

This is all you need to remember.

This is the return you would have gotten
if you had invested in index ETFs like the Nasdaq or S&P and done nothing.
Last year the Nasdaq actually rose about 35%.
Not making a 35% return last year

means, to put it bluntly, you did worse than sitting still.

### Green is the institutional investment return

Capital X time X alpha value
The market-beating return (alpha) that
the pros at investment firms produce by any means necessary
Leading hedge funds, asset managers, and the like

This is not the domain of the individual investor.

### Purple is the individual investor return

Capital X time X beta value
In the early days of investing, their returns beat the institutions.
It may be beginner's luck, or just a good market.
But in a down market they get crushed and even lose their principal.

Capital X time X beta value (0) = bankruptcy

And so their confidence converges on a blown-out account.

![](371b52-1737205506.png)

In the individual investor's beta return,
merely touching Zero (a blown-out account) means bankruptcy.

Yet many investors
put money into things they don't really understand,
or, trying to beat the market, touch 'zero'.

![](371b52-1737205507.png)

It feels something like this.

Looking at the orange line

Sometimes the return beats the market, and you grow arrogant.
You think your return is decent, better than others'.
When the market turns bad, your return falls below the index average.
Losing confidence, you bet even more.
Finally, betting big on the market,

you crash and touch 'zero'.

So what are you supposed to do, you ask?
You have no talent for investing.

Studying investing feels overwhelming,
my time is precious so I don't want to study,
and on top of that I don't even know what to buy,
I have no criteria,
yet I want to make money
= that's me.

If you can aim for the market's alpha,
study investing and make the effort to beat the market.
If you coldly conclude you can't,

Capital X time X beta value (market return)
just remember this: entrust yourself to the market
and believe in 'time'.